Farmers in 3 States Suffer as Punjab Mandis Are Flooded by Produce from UP, Bihar

Punjab's well-oiled mandi system provides an opportunity for traders and middlemen from other states, while farmers continue to struggle for the right price.

Chandigarh: Upinder Kumar Sharma, a farmer from Vaishali district in Bihar and also secretary of a local small farmers’ union, grew paddy over his one-acre farm. He told The Wire over the phone from his hometown that his produce was of fine quality.

Upinder wishes to sell his produce at good rates, buy rice for his “big joint family” and wheat seeds for the next season and have enough left to afford other household items.

“You know what a local baniya told me? Your produce is fine but it can’t get you more than Rs 1,100 per quintal. I had no option but to sell it at his rate,” he said.

The major problem for farmers of Bihar, said Upinder, is the lack of market opportunities. The Centre’s latest minimum support price (MSP) for paddy is Rs 1,868 per quintal but those like Upinder are forced to sell it to middlemen or agents at rates much below the government stipulated one. This is because government purchase is minimal and there is no check on state agencies when it comes to purchases, said Upinder.

He said that even though paddy harvesting is about to draw to a close in his area, the process of government procurement that is done through panchayat level committees is yet to begin. “Even if they buy, farmers usually need to wait for three to four months for payment,” he said, which makes it open season for middlemen.

This is also the inter-state paddy racket that the Punjab police is claiming to have busted now.

The Punjab government’s principal secretary for food, civil supplies and consumer affairs, K.A.P. Sinha, told The Wire that in the past few weeks, police have registered 69 FIRs under Sections 420 (cheating) and 120-B (criminal conspiracy) of the Indian Penal Code for cases dealing with the influx of paddy to Punjab from Bihar and Uttar Pradesh.

Sixty of these FIRs have been registered in Patiala district that shares the border with Haryana, from which the National Highway 1 comes into the state.

Inspector Gurmeet Singh, who is station house officer of the police station in Ghanaur block of Patiala district, said that farmers of other states are not involved in this racket. Most of the arrests in this case have been of drivers and their helpers.  “But this racket could not have been run without the involvement of traders, commission agents and millers from Punjab, UP and Bihar. Based on the transport documents, the police are trying to identify these people,” he said.

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Anindita Mitra, director of food, civil supplies and consumer affairs, said that 128 trucks and 11 trolleys have been confiscated so far. The vigil has been further stepped up in all border areas, she said.

“Drivers of the confiscated trucks told police that the paddy they were trying to pump into Punjab’s mandis was purchased for as low as Rs 800 per quintal from the farmers of Bihar and UP. They would be sold at the full MSP, turning the advantage of a strong government procurement system in Punjab into huge profits,” said Mitra.

She said that while directions have been given to all district collectors and police superintendents to increase the border vigil, the department too has initiated an inquiry in four districts – Ferozpur, Tarn Taran, Gurdaspur and Amritsar – where they have recorded an unprecedented amount of paddy arriving.

“We, through our team, are doing backward linkages as well as forward linkages, meaning that we are physically verifying the fields of farmers to figure out whether he was capable of producing the quantity which was sold in his name in the mandis that are under the scanner,” she said. “Then we are also verifying the rice mills where paddy was sent for processing after purchase from farmers.”

But Mitra has a point when she says that the question is not just of enforcement. Such activities are happening because the farmers in other states are unable to sell their produce at proper the MSP. On the contrary, Punjab has a proper mandi system where every purchase is recorded and payment is made swiftly to the farmers through online transfers.

As per the latest government data, Punjab that has approximately 30% contribution of rice in the central pool which is highest in the country, has already procured 153 Lakh Tonnes of paddy out of state’s estimated production of 170 Lakh tonnes this year.

‘Forced to sell to middlemen’

B.N. Singh, president of the Small Farmers Association of Bihar’s Vaishali area brings to the fore the pitiable condition of farmers in his state. There is no procurement system in place, he says.

“The Centre announced the paddy MSP at Rs 1,868-1,888 per quintal, but who will buy it at this rate? Where should we take our produce?” asked Singh.

Koi puchne nahi aata jab hamari fasal tayaar ho jati hai. Kisan kya kare phir? Majboori main bichaulie ko bechna parta hai (No one cares when our produce is ready. Where should a farmer go, then? The helplessness forces us to sell our produce to middlemen),” said Singh.

The paddy found at Punjab’s borders can be easily explained, he said. “Agents here buy paddy from us at a low price, keep their profit margin of at least Rs 200-300 per quintal, spend another Rs 150-200 per quintal on transportation and the remaining margin is kept by middlemen operating in Punjab. A farmer deserves this profit, but it’s being pocketed by others.”

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When asked why farmers’ plight doesn’t become a main election issues, Ramashish Rai, president of the Rashtriya Kisan Sabha that operates both in Bihar and UP, said the irony of Bihar is that the elections here are fought on caste lines. “Although unemployment has emerged as a key issue in the ongoing state elections, the real issues often take a back seat,” he added.

He demanded that MSP-based procurement must be restored in Bihar since middlemen take away a large part of farmers’ profits. “I recently held meetings with farmers here and they told me that they are not getting more than Rs 1,000-1,100 per quintal for their produce – that is much below the centre’s MSP,” said Rai. “Even maize is not sold above Rs 700-800 per quintal.”

Confiscated paddy trucks from UP and Bihar parked in the Ghanaur block of Patiala district. Photo: Vivek Gupta

Rai said that 14 years ago, in 2006, Bihar abolished the Agricultural Produce Market Committee (APMC) Act with a view to liberate farmers, on the same lines as the Centre’s new farm Bills. “But it has left the state’s farmers at the mercy of middlemen. They are the ones extracting the profits that otherwise belongs to the farmers.”

He said the government procurement for the Central pool in Bihar is done through panchayat-level cooperative societies (Primary Agriculture Credit Societies) but their working is also unsatisfactory. They enter the market when most of the farmers’ produce has already been sold to middlemen. Cooperative societies also pay the farmers very late.

Assistant general manager of the Food Corporation of India in Patna, Sushil Tirkey told The Wire that the FCI does not make any purchases from Bihar. The state fixes its own target for procurement and then uses it under the public distribution system (PDS). But often it is seen that they are unable to meet their annual PDS rice target. The gap is then met through FCI supplies from other areas, he said

Sharing the data, Tirkey said the average paddy production in Bihar is between 70-80 lakh tonnes. But the state’s paddy procurement in 2019-20 was just 20.02 lakh tonnes and the resultant production of rice was 13.41 lakh tonnes. On the contrary, the state’s annual requirement of rice under the PDS is approximately 40 lakh tonnes. The gap is met by the FCI from other regions on a payment basis, he said.

Leading farm expert Devinder Sharma told The Wire that Bihar would never have become the labour basket of India if the APMC Act was not abolished there. Sharma said that Bihar is a classic example of how an open market will never give farmers the right price.

He said the farmers were told that a huge private investment would come if the APMC Act was abolished. They would set up big mandis and buy produce at a higher market price. But nothing happened. Instead, market forces monopolised markets and began exploiting farmers. “That is why Punjab, which still has a strong APMC-based mandi system, faces issues like paddy smuggling from Bihar and UP,” he said

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According to Sharma, India currently has 7,000 APMC mandis and “We need at least 42,000 mandis if we need to provide farmers a mandi within a five km radius, as per CACP [Commission for Agricultural Costs and Prices] recommendations”.

Instead of pushing the farm Bills, the Centre must set up a strong network of APMCs all across the country. That should become a place where farmers come and sell their produce. Secondly, the government must provide farmers the MSP for all the crops for which the price is announced for, said Sharma.

“It is not necessary that the government should buy the farmer’s produce. They can regulate MSP-based purchases in APMCs if even private traders buy it from the farmers,” he said. “If this happens, it will be the real freedom of the farmers.”

Eastern UP worst affected

In Uttar Pradesh, the APMC Act has not been repealed but farmers, especially those in the eastern part of the state, still don’t get MSP for their produce.

A major reason for this, as explained by an FCI procurement officer in Lucknow, is that the state’s total procurement is not more than one-third of its total produce. Secondly, most of the notified APMCs are in western UP, thereby leaving farmers in eastern region at the mercy of traders and middlemen.

UP’s average paddy production is 160 lakh tonnes, but in 2017-18, the state procured not more than 43 lakh tonnes followed by 48 lakh tonnes in 2018-19 and 57 lakh tonnes of paddy in 2019-20.

In Punjab, paddy procurement is almost finished but total paddy procurement in UP as on November 3 was just 5.60 lakh tonnes, revealed data from the FCI.

Bharatiya Kisan Union’s national spokesperson Rakesh Tikat told The Wire from Muzaffarnagar that when a union delegation met the UP chief minister in the last week of September, they were assured that farmers’ produce will not be allowed to sell below the government MSP.

“But this is not happening on the ground,” said Tikat. He said that in eastern UP, farmers are forced to sell their produce at Rs 1,200-1,300 per quintal and there is no regulation of the state agencies.

Paddy procurement is at full swing at the new grain market in Patiala city. Photo: Vivek Gupta

In western UP, farmers are forced to take their produce to the mandis of the bordering town in Haryana but are not entertained there legally, forcing them to enter deals with middlemen and agents.

He demanded that a similar Act as passed by Punjab, making MSP mandatory, should be passed by the UP government too, to safeguard farmers’ interests.

On November 4, the Punjab and Haryana high court issued a notice to the Haryana government over its refusal to procure paddy from a farmer from UP. The farmer’s main grouse in this case is that despite the mandate of Section 3 of the newly-enacted Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, which provides absolute freedom to a farmer to sell produce anywhere in India, he is not being permitted to sell his produce in Haryana.

Quantity of illegal trade in Punjab

Different sources in the police confirmed that the confiscated vehicles were carrying over 2,500 tonnes of paddy, costing approximately Rs 5 crore. The illegal trade, however, is of far more than a few thousand tonnes of paddy if the total production and total purchase of paddy in Punjab in previous years are taken into account.

As per data procured from the Punjab agriculture department, the estimated paddy production in 2019-20 was 150 lakh tonnes. On the contrary, Sumeet Bansal, FCI’s deputy general manager (procurement) in Chandigarh, told The Wire that the total paddy procurement in the state for 2019-20 was 162 lakh tonnes, which means that as much as 12 lakh tonnes was brought from elsewhere.

Recently, a WhatsApp chat between a Punsup district manager in Patiala and a trader went viral, in which they were discussing allowing the sale of paddy bought at lower rates from other states at the MSP in Punjab. The Punsup official at Patiala and the trader discussed how much he should be paid by the commission agent for allowing the entry of paddy in the mandi. They talk of having an inspector of the agent’s choice posted in the Patiala mandi.

K.A.P. Sinha, principal secretary, food, civil supplies and consumer affairs, said that this officer stands suspended right now. The department has also issued a notice for his dismissal but he has filed a complaint to the local police saying that the same communication has not emerged from his number. The case is under investigation by the IT wing of the Patiala police. In the meantime, the officer has gone to the high court and got a stay order against the notice of his dismissal, said Sinha.

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Sinha said that the possibility that local procurement officers are involved in this racket can’t be ruled out, “but we have not got such evidence so far. Once we get some proof we will immediately take appropriate disciplinary action against all the concerned.”

On higher procurement than the state’s production, Sinha said it is true that paddy procurement in the state is increasing. However, it cannot be attributed solely to the influx of paddy from other states. Over the years, yield per acre has also increased but it does not always reflect in the agricultural data.

Meanwhile, Punjab farmers’ organisations have found a reason to justify their protests against the Centre’s Bills in the wake of the paddy influx from other states.

Joginder Singh Ugrahan, president of the BKU-Ekta Ugrahan, told The Wire that middlemen and traders are thriving in UP and Bihar since there is no proper procurement system and notified APMCs. “Punjab will face a similar fate if the new Central Acts are implemented here. We will be forced to sell our produce at cheap rates, as is happening in UP and Bihar,” said Ugrahan.

Sukhdev Kokri, general secretary of BKU-Ugrahan, said that that is the reason why farmers’ organisations in Punjab are determined not to let the new farm laws come into force here.